Fintech companies targeting the millennial workforce will have to do more than just talk about social causes if they want to win over millennials – a 2015 study released by Cone Communications found that 70% of US millennials consider companies’ social and environmental commitments in deciding where to work.
As an example of how the mashup of Corporate Social Responsibility (CSR) and hiring trends is already playing out in fintech, leading student loan platform CommonBond credits its social mission with bringing in exciting new millennial talent to the company. CommonBond’s 1-for-1 giving model has it fund the education of a child in need with every loan it funds. “On the recruiting side, it’s one of the reasons we get 300 to 400 applications for every role we have,” said David Klein, CEO of CommonBond. “It’s also one of the reasons why we have an acceptance rate of 85% for every job we offer.”
In terms of consumer acquisition, 50 percent of the company’s customers reach the company through word of mouth — the largest figure of anyone in the student loan industry, according to Klein. “We think at least a part of that is the fact that we have a social mission and not everybody does,” he explained.
The statistics agree with him. A 2015 study by global performance management company Nielsen found that 73 percent of millennials — the biggest percentage of any age group surveyed — are willing to pay extra for sustainable offerings from brands.
CSRs can also help companies ignite and maintain employee enthusiasm. Tmura, an Israeli public service venture fund which enables venture capitalists and high tech companies to contribute equity shares and then allocate the proceeds to charity upon a liquidity event, has seen firsthand what share donation can do for company morale.
Baruch Lipman, executive director of Tmura, points to Waze, the Israeli map and driving app, as an example of a company that was able to involve to involve its employees in the giving process following the company’s $1.15 billion acquisition by Google in 2013.
“After the exit, Waze asked us for a shortlist of nonprofits, and the employees actually voted on where they wanted the funding to go,” said Lipman. “Waze CEO Noam Bardin got up in front of all of the employees and said ‘Look, all of you employees should be very proud of the fact that as part of our acquisition we collectively gave $1.5 million to charity.'”
The nonprofits chosen to receive the allocation returned to Waze to present progress reports after several months, which showed the employees, in a very tangible way, what they were able to accomplish with their donation.
Lipman noted that donating shares to charity can also impact a tech company at the corporate level. The organization’s events serve as a networking opportunity for VCs and tech companies. Moreover, Lipman sometimes finds himself making connections between smaller and bigger fish. “I don’t propose to be anyone’s business partner, and we’re very clear about the fact that we’re here with a certain mission, and we’re not taking finders fee for matchmaking and things like that,” Lipman stressed. “If I’m able to help on an ad hoc basis, I’m happy to help.”
The benefits of an “options-for-charity” platform like Tmura are transferable across the the technology sector. And while fintech may be weaving charitable giving into everyday transactions, there is little information available regarding the state of CSR in the sector.
By attracting employees and customers, boosting employee morale and providing networking opportunities, CSR models have shown that they’re not just the right thing to do, they’re can be a good business model as well.